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08.16.18

Straight Talk for Startups

Straight Talk for Startups

E
NTREPRENEURSHIP is not for everyone. It’s not an escape from the cubicle, hard work or bosses. But it is creative. It can be enriching in many ways. And if you are successful, you can believe that you did it all on your terms. And while it’s easier than ever to get started, it harder than ever to succeed.

Randy Komisar and Jantoon Reigersman bring decades of startup experience to help you beat the odds. In Straight Talk for Startups they offer 100 insider rules to bring clarity and a dose of reality to the entrepreneurial process. So whether you’re thinking of starting a business or are in the middle of managing one, this book will help to avoid (are correct) rookie mistakes.

Komisar and Reigersman begin by telling you what matters and what doesn’t. Before you quit your job, here are a few things you need to think about:

It’s hard. Because money is abundant, “it’s no surprise that the competitive landscape becomes crowded and non-economic.” It’s not uncommon for your competition to sell below cost in order to buy customers with their capital. And employees tend to act more like mercenaries than comrades in arms.

Try to act normal. “There is nothing normal about being an entrepreneur.” I loved this line: “Venture capitalists have one of the greatest jobs in the world. They get to sit across the table from passionate strangers who hallucinate the future for them.” They advise that when selling your idea: “Don’t let them know you are one of those precious lunatics hell-bent on changing the world until you’ve gotten to know them better. You don’t want to scare them off right at the start.”

Aim for an order-of-magnitude improvement. You’ve got to give people a really good reason to move from where they are quite comfortable to where you want them to be—a loyal customer. An order-of-magnitude of ten times is the minimum. Beyond that you improve your odds of success. “If you try to thread the needle with an innovation that is just good enough, you may miss [the target] entirely. But if you shoot for an order-of-magnitude change, you may still be in the game even if you miss by half.”

Most failure result from poor execution, not unsuccessful innovation. “Plenty of people confuse luck for skill. We flatter ourselves and find cause where there is none. The difference between skill and chance boils down to repeatability.” Timing matters. The elements need to line up. The authors identify six significant stages of development:

Stage 1: Idea—develop your idea and assess its attractiveness
Stage 2: Technology—build the technology
Stage 3: Product—deliver the product
Stage 4: Market—demonstrate market demand
Stage 5: Economics—prove unit economics in real life
Stage 6: Scale—now, finally, grow your business

There is a method to the madness. Don’t get ahead of yourself. Great clarification: “The creative process is essentially an execution process, not a eureka moment.

Other rules include:
  • A part-time game changer is preferable to a full-time seat filler.
  • Manage your team like a jazz band.
  • Net income is an opinion, but cash flow is a fact.
  • Avoid venture capital unless you absolutely need it.
  • Too many unanimous board decisions is a sign of trouble.
  • Success is not linear.
  • Learn the rules by heart so you know when to break them.
Komisar and Reigersman close by saying, Always ask why. Why this? Why you? Why now? Asking why will keep you grounded.
Know why this venture is important to you. Why it should be important to others. And given the low probability of success for any venture, why it is nevertheless worth failing at. Of course you don’t want to fail; success is always preferable to failure. But if you fail, will you feel you wasted your time, or that you fought the good fight?

Keep yourself grounded and your wits about you by frequently asking yourself, Why? Entrepreneurship is important because it has the power to make the world better. That is why it is worth all the blood, sweat, and tears.

If you are considering starting a business, you will do well to also read Randy Komisar’s The Monk and the Riddle: The Art of Creating a Life While Making a Living.

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Posted by Michael McKinney at 08:01 AM
| Comments (0) | Entrepreneurship



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